RRSPs

Nelson & District Credit Union will strive to provide members with solutions to help them pack responsibly for their unique life stages, like retirement, so they may reach their viewpoints. This process is called the Financial Hike.

RRSPs

A Registered Retirement Savings Plan (RRSP)is an excellent way to save for your retirement while deferring taxes at the same time. A RRSP is a government-approved plan through which you save money for your retirement years. Your contributions, within limits, are tax deductible and the income earned is tax-sheltered. An RRSP enables you to invest money when you can most afford it—during your peak earning years—to build up a comfortable retirement fund.

Who is Eligible?

Anyone with earned income subject to Canadian taxation may contribute to an RRSP. Even if you are not taxable, you should file a tax return to report your earned income and create RRSP deduction room.

You can contribute to a plan in your spouse’s name and still be entitled to the tax deduction. Contributions can be made until the end of the year of the plan holder’s 71st birthday. An over-contribution can be deducted in subsequent years providing you have earned income on which to base the deduction.

Advantages

While designed specifically as a retirement vehicle, an RRSP has benefits throughout your lifetime:

By contributing to an RRSP throughout your working career, you'll realize immediate tax benefits at a time when your income is generally highest. The total amount of your annual contribution can be deducted from your gross income at tax time, reducing the amount you pay in income tax that year.

The income earned in your RRSP is not taxed until it is withdrawn. While your investments sit in your RRSP, their growth is tax-sheltered and so the total value may grow more quickly.

By the time you begin to withdraw the funds at retirement, you will probably be in a lower tax bracket than during your earning years. Funds withdrawn at that time will benefit from this lower tax rate.